Despite attempts by Jignesh Shah – Chairman & Group CEO of Financial Technologies India Ltd (FTIL) — to distance himself from the settlement crisis at the National Spot Exchange (NSEL), his role as a “key management personnel” at NSEL until last year has put him in the direct line of fire.

In a show cause notice issued by the Forward Markets Commission (FMC) on Friday, the regulator pinned the blame for the crisis not just on the exchange management but also a group defined as “key management personnel”, which included Shah and Joseph Massey, who is managing director and chief executive officer of MCX-SX.

Accounting Standard 18 defines key management personnel (KMP) as officials with the authority and responsibility for controlling, planning and directing the activities of a reporting enterprise, and are required to be included in the company’s annual report.

Based on the FMC scrutiny, it was found that Jignesh Shah was among the key management personnel for the exchange between FY06 and FY12. It was only in 2012-13 that Shah was not included in that group.

Notably, since the FMC found nearly 2,000 instances of default at the exchange spread over the past two years, the regulator was of the view that Shah could not be absolved of responsibility for the settlement crisis.

In addition, the decision to go ahead with “paired contracts” was taken in 2009 — a year in which Shah was among the key management personnel.

In the case of Joseph Massey, it was found that he held the position of key management personnel for five years beginning FY06 and hence would have been in the know of the decision to go ahead with paired contracts even though they were against the rules for spot exchanges.

Interestingly, the list of executives included in the group of key management personnel continued to shrink with each passing year. By 2012-13, Anjani Sinha — former managing director and chief executive officer of NSEL — was the only person included in that list.

“Is it that they were aware of the irregularities and that's why they left,” wondered a senior official privy to the developments.

The show cause notice which questions the fit and proper status of FTIL, Jignesh Shah, Joseph Massey and MCX MD & CEO Shreekant Javalgekar comes in light of a Rs 5,600-crore settlement crisis at NSEL.